“Currently, the U.S. admits more than 1.5 million legal and illegal immigrants every year, with more than 70 percent coming to the country through the process known as “chain migration” whereby newly naturalized citizens can bring an UNLIMITED relatives to the U.S. In the next 20 years, the current U.S. legal immigration system is on track to import 15 million new foreign-born voters. Between 7 and 8 million of those foreign-born will arrive in the U.S. through chain migration.” JOHN BINDER

Thursday, February 11, 2016

OBAMA'S CRONY BANKSTERS GET DRESSED UP FOR THEIR NEXT ROUND OF BAILOUTS - Fed seeks to reassure markets on rate increases

Fed seeks to reassure markets on rate increases

By
Barry Grey
11 February 2016

US Federal Reserve chair Janet Yellen testified Wednesday before
the Financial Services Committee of the House of Representatives,
presenting the central bank’s semiannual Monetary Policy Report. Yellen
will appear today before the Senate Banking Committee.

In her
opening statement and her replies to questions from Democrats and
Republicans on the committee, Yellen sought to reassure financial
markets in the US and around the world that have taken huge losses since
the beginning of the year and are being further pummeled by
recessionary pressures and signs of a new banking crisis.

Yellen
broadly hinted that the Fed would hold off on a further increase in its
benchmark federal funds interest rate when its policy-making Federal
Open Market Committee meets again in mid-March. At the same time, while
not ruling out a possible reversal of the quarter percentage point
increase the central bank imposed in December, its first interest hike
in nine years, Yellen said the Fed stood by its announced intention to
institute incremental and gradual increases in the course of 2016.

Yellen’s
prepared statement, released early Tuesday morning along with the
Monetary Policy Report, helped fuel a rebound on European stock markets.
They had fallen for six straight sessions amid new indications of
slowing growth in the US as well as China and further declines in the
price of oil and other industrial commodities, combined with mounting
concerns over the financial stability of major European banks.

US
stocks initially rose in response to Yellen’s testimony, but her
assurances proved insufficient to overcome the general mood of gloom and
foreboding. The US indexes closed mixed, with the Nasdaq registering a
gain, the Standard & Poor’s 500 ending flat, and the Dow Jones
Industrial Average losing 99 points.

The slide toward global
recession was sharply expressed this week in the descent of Japanese
government bond yields into negative territory. In the US, the yield on
10-year Treasury bonds has plunged well below 2 percent, reflecting the
same deflationary trends.

The proliferation of super-low and even
negative interest rates is wreaking havoc on banks that remain burdened
with bad loans and stand to incur more losses from energy-related assets
that are souring due to the collapse of oil prices and its impact on
energy revenues and profits.

Bank stocks in Europe are down an
average of 27 percent so far this year, with Deutsche Bank, Germany’s
biggest, suffering a loss of more than 40 percent. In the US, bank
stocks are down 18 percent, with shares of Bank of America and Morgan
Stanley having dropped 27 percent and 28 percent, respectively.

US
stocks overall have fallen by more than 9 percent since the beginning
of the year, and stocks in Europe have declined even more sharply. In
the US, tens of thousands of job cuts have been announced in both the
industrial and retail sectors. Among the major non-retail firms
announcing layoffs are Johnson & Johnson, Norfolk Southern, US
Steel, Yahoo and Altria. Energy and mining firms have laid off thousands
more workers.

The worsening social crisis impacting broad
sections of the US population is reflected in the wave of store closings
and layoffs by major retail chains, including Wal-Mart (269 stores,
16,000 job cuts), Macy’s (40 stores, 4,500 layoffs) and Sears-Kmart
(more than 50 stores, thousands of job cuts).US economic growth
is estimated by the government to have slowed to 0.7 percent in the
final quarter of 2015, and data on manufacturing continues to show
recessionary conditions.

US corporate profits are also down.
Profits reported by firms in the S&P 500 index for the fourth
quarter of 2015 are down 4.1 percent from a year earlier. Sales are down
3.5 percent. This means profits have declined, year-on-year, for two
straight quarters, the first time that has occurred since 2009. Sales
have fallen for four consecutive quarters.

The near panic in
financial circles was summed up in a statement released last week by
strategists at Citibank, which declared, “The world appears to be
trapped in a circular reference death spiral.” Predicting that the world
economy would grow by only 2.7 percent this year, far below the already
depressed projections of the International Monetary Fund, Citibank
warned of “a proper/full global recession and dangerous disorder across
financial markets.” Its report concluded, “The stakes are high, perhaps
higher than they have ever been in the post-World War II era.”

Leading
economists, including former treasury secretary Lawrence Summers, are
raising their estimates of the chances of a recession in the US this
year. Summers, echoing estimates by JPMorgan Chase, puts the likelihood
at one in three. Others say the recession has already begun.

In
her statement and her responses to members of the House committee,
Yellen played down the prospect of an economic contraction in the US.
However, she acknowledged the slowdown in the US and pointed to other
trends, such as falling share prices, higher interest rates for
high-risk borrowers, and a further appreciation of the dollar, as
increasing the downside risks to the economy. She implied that these
trends could lead the Fed to hold off on further interest rate hikes.

Significantly,
she also pointed in some detail to negative international trends and
said the Fed was monitoring them closely in considering whether and when
to again raise rates.

“As is always the case,” Yellen said in her
opening remarks, “the economic outlook is uncertain. Foreign economic
developments, in particular, pose risks to US economic growth. Most
notably…declines in the foreign exchange value of the renminbi have
intensified uncertainty about China’s exchange rate policy and the
prospects for its economy.

“This uncertainty led to increased
volatility in global financial markets and, against the background of
persistent weakness abroad, exacerbated concerns about the outlook for
global growth. These growth concerns…contributed to the recent fall in
the prices of oil and other commodities. In turn, low commodity prices
could trigger financial stresses in commodity-producing firms in many
countries. Should any of these downside risks materialize, foreign
activity and the demand for US exports could weaken and financial market
conditions could tighten further. …”

She once again stressed that
any further rate increases would be small, that the Fed’s monetary
policy would remain “accommodative,” and that the federal funds rate
would remain below normal levels for the foreseeable future.

In a
further reassurance to banks and hedge funds demanding a continuation
of cheap credit, Yellen added, “Of course, monetary policy is by no
means on a preset course. We will take into account...readings on
financial and international developments. … If the economy were to
disappoint, a lower path of the federal funds rate would be
appropriate.”